12 April 2013

Temasek sets up unit for big move into LNG business

Pavilion Energy to source LNG for customers in Singapore and region

Pavilion said it will work to set up various parts of its operations in the coming months and expects to be operational by Septembe- PHOTO : REUTERS

TEMASEK Holdings is going big into the liquefied natural gas (LNG) business - including potentially investing and participating in upstream LNG projects, as well as downstream in LNG storage and regasification terminals, LNG trading and shipping. It has just set up Pavilion Energy, with an initial authorised capital of $1 billion, to partner leading industry players to source LNG for customers in Singapore as well as in growing Asian markets.

Pavilion may also co-invest alongside Temasek, which has been stepping up investments in the energy and resource sectors in the last few years, according to an announcement by the new company yesterday.

The move comes just as the multi-billion-dollar Singapore LNG terminal is ramping up for full operations this quarter. The Jurong Island terminal will allow the Republic to import LNG from anywhere in the world for power stations and industries here, thus helping it to diversify gas supplies currently piped from neighbouring Indonesia and Malaysia.

Helming Pavilion Energy as its chief executive is new Temasek senior managing director Seah Moon Ming, with former Petronas president and CEO Hassan Marican (currently Singapore Power chairman) as chairman. Also on board will be Liew Mun Leong, the former CEO of CapitaLand Group.

Temasek's establishment of Pavilion follows recent substantial investments it made in Cheniere Energy, the only US company so far to get the necessary US government approvals to export gas from shale gas projects there. It first made a joint US$468 million investment with private equity fund RRJ Capital for a combined 19.8 per cent stake in LNG exporter Cheniere Energy last May. The two followed that up with an additional US$310 million investment this February in Cheniere subsidiary Cheniere Energy Partners, which owns its first LNG export terminal at Sabine Pass.

That was around the time Temasek brought on board Mr Seah, previously deputy CEO of ST Engineering, as its senior MD to look at LNG investment opportunities. "He will be leading an initiative to establish a business entity focusing on opportunities in the LNG sector, which is expected to grow in Asia," Temasek said in February.

Mr Seah said yesterday that "to secure long-term and stable supply of LNG to our customers in Singapore and the Asian region, we will be sourcing our LNG supply from multiple sources and various partners in North America, Europe, Asia, Africa and Australia.

"We also expect to participate and invest in various parts of the LNG value chain to ensure long-term LNG supply. These could include LNG trading; investing alongside international oil and gas companies as partners to develop upstream LNG projects; building of LNG storage and regasification terminals; and investing in LNG shipping."

This is because "long-term, secure and reliable supply is critical to success in the LNG business", he stressed.

Pavilion said it will work to set up various parts of its operations in the coming months and expects to be operational by September.

BY RONNIE LIM